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(Bloomberg)—Staples Inc. said its improved remedy proposal to win antitrust approval for Office Depot Inc. was rejected by the U.S. Federal Trade Commission, which sued to block the merger of the office supply retailers earlier this month.

Staples, No. 4 in the Internet Retailer 2015 Top 500 Guide, said it offered to transfer commercial contracts worth up to $1.25 billion from $500 million previously, according to a statement Monday.

The FTC rejected that offer without making a counteroffer, Framingham, Mass.-based Staplessaid in the statement. The company said it’s willing to continue negotiations with the FTC to reach a settlement that addresses its concerns.

The FTC sued to block the tie-up between the No.1 and No. 2 office supply retailers Dec. 7, saying the transaction would hurt competition and should be blocked. The agency said the deal would raise prices for corporate customers who buy under contract. A trial has been set for March 21 in Washington.

Staples, which had $11.23 billion in 2014 web sales, said it would continue to pursue the transaction through litigation. Office Depot is No. 8 in the Top 500 and had an Internet Retailer-estimated $4.3 billion in 2014 web sales, according to Top500Guide.com.

“The company is confident in its legal position and looks forward to a full and impartial judicial review of the matter,” Staples said in the statement.

During a court hearing last week, Diane Sullivan, a lawyer for Staples, said that the companies had held "significant and substantial discussions" with the FTC.

FTC lawyer Tara Reinhart responded that the agency has told the companies that it’s concerned that they are merely transferring contracts and not divesting physical assets.